• IT
Viewpoint •
Things Fall Apart
How will the industry fare in the new millennium?
by Richard Poynder

Held December 7-9 in London, the Online Information
99 Conference and Exhibition brought the usual flurry of new product launches,
including the release of QWEB from Questel•Orbit and a new Web search engine
from Dialog called WebTop.com. It also saw the inevitable surprise acquisition—in
this case the announcement that RoweCom had agreed to buy NewsEdge for
$227 million.

But did this annual international exhibition and conference give any
clue as to how the industry might fare in the new millennium? Walking around
the event for my 10th year I found plenty of questions, but few comfortable
answers.

First, while the show attracted an impressive 18,000 visitors, attendance
at the event appears to have peaked in recent years (17,728 in 1997, 17,000
last year). With the Internet continuing to grow at an exponential rate,
could this indicate that the industry is struggling to attract new users
at the very point when the online medium is becoming as ubiquitous as the
television?

Second, seeing a subscription agent (RoweCom) buy a real-time news provider
(NewsEdge) when news information is becoming a commodity had me wondering
if the industry is losing its way. Clearly, consolidation is inevitable
in an industry under pressure, but the logic of consolidation is that while
there may be too many players, and too few customers, the basic business
model is sound. Surely, however, the business model of NewsEdge is being
shredded by the Web.

I visited the RoweCom booth and asked J. Charles Germain, regional president
for Europe, Middle East, and Africa, why the company had bought NewsEdge.
“NewsEdge has a strong database of news articles for the corporate market,”
he replied. “They’re strong in the corporate market—which is where the
market is growing—and we are strong in the academic market.”

Third, why—at a time when it is under huge pressure from shareholders
to reduce its debt mountain—has Dialog committed resources to building
a new Web search engine? Does the world really need another one? True,
WebTop.com introduces a number of novel features, including the ability
to cut-and-paste search queries from documents directly into the search
engine, as well as the automatic indexing of selected company Web sites
using Dialog’s InfoSort technology. But how, I asked John Snyder, CEO of
WebTop.com, does Dialog hope to make money from the new service? There
might, he replied vaguely, be scope for advertising and promoting other
Dialog services through WebTop.com. “We could, for instance, start to offer
Profound data though the service. Likewise, we could sell e-commerce products
into it.”

Fourth, does the industry fully understand the extent to which time
has been foreshortened by the Web? After all, the launch of QWEB is little
more than the release—finally—of the full Questel•Orbit service on the
Web. Hardly a rapid response to the Internet revolution. At the Financial
Times Electronic Publishing booth, where FTEP staff members were demonstrating
a Web version of FT Profile, the situation was still less encouraging.
Begun a number of years ago, subsequently abandoned, and now restarted,
the business of migrating FT Profile to the Web is clearly a lifetime project.
And what was being shown at the show was far from completion. “All we are
demonstrating is a concept product,” conceded one of the demonstrators.
[Editor’s Note: As we went to press, FT Profile, along with the rest of
the Financial Times Group’s Business Information Products division, was
acquired by the LEXIS-NEXIS Group.]

All in all, it was hard not to conclude that the online industry is
doing too little, too late. Moreover, rather than exploiting the characteristics
of the Web to create unique new products for the business community, the
industry seems content to simply copy concepts developed elsewhere. No
one has been more assiduous in this than Dialog’s Dan Wagner, who has single-mindedly
pursued every buzzword to emerge from the Internet, from push to portals,
from intelligent agents to e-commerce, and now knowledge management and
search engines.

The problem is that many of the resulting products are either 20-day
wonders, or based on consumer models that are inappropriate for the business
market. And simply aping consumer models, one exhibitor pointed out to
me, could rob the industry of its best opportunities. “A recent Dataquest
survey showed business-to-business revenue rising from approximately $175
billion in 2000 to over $800 billion in 2003, compared with a rise of $75
billion to just $190 billion for consumer revenues,” said Chris Knowles,
managing director of Vrisko, a London-based provider of automated intelligent
search solutions for investment banks. “It’s strange that so many companies
are developing consumer-type products when the real growth will be in business-to-business.”

This lack of creativity and innovation is a historical problem, rooted
in the industry’s early years—a point made to me against the hubbub of
the show’s press office by Pierre Buffet, marketing director at Questel•Orbit,
and 29-year veteran of the online industry. The industry, Buffet reminded
me, was a product of the Cold War, born at a time when there was an abundance
of research money, and a shortage of competitive pressures. Consequently,
he suggested, it has until now never had to develop finely honed business
models. “We are all suffering from the fact that the business model of
the ’70s—the pay-as-you-go, connect-time model—is a bad business model,”
he said. “Customers are frustrated because they feel they are paying too
much, and the hosts are frustrated because they don’t earn money. There
is clearly something wrong. The question is: Can we change the business
model?”

The way forward, he suggested, will require discarding inherited shibboleths.
“For instance, we have lived for 20 years with one buzzword, which was
the keyword,” he said. “The keyword was the core of our business. But today
the Web has standardized the concept of the link. So we need to throw away
the term keyword, and replace it with the word link, along with all the
meanings you can attach to the concept of linking.”

Judging by what was on display at the conference, however, the industry
has some way to go. True, there is a growing trend towards building links
between abstracts and full text (even Dialog has developed its eDOCS GOLD
linking project). But is the industry being sufficiently radical or creative
in its response to the new paradigms of the Web?

The most interesting attempt to build a business around Web links being
demonstrated at the show was not the work of a traditional online player,
but that of a small Web start-up founded by ex-Financial Times journalist
Nick Denton. While at first glance moreover.com appears to be simply a
database of links to news stories on the Web—and today it provides free
links to over 1,500 news sources, including The Economist, The Washington
Post, The Chicago Tribune, The New York Times, the BBC, and the Financial
Times—closer inspection shows that it does far more than that.

Not only are these links indexed into 200 categories accessible at no
cost, but moreover.com provides a simple tool to allow other Web sites
to create an instantaneous news service on their own sites—at no charge.
All they need do is cut out a script that is e-mailed to them, and then
paste it into their own home pages. How does moreover.com hope to make
money out of its service? “We also offer [customized] categories from $1,500
a month,” said Heidi Peters, marketing manager at moreover.com. “These
are built and maintained by human editors.” Clearly, time will tell if
there is a viable, long-term business here, but the Web has taught us that
the fast-moving, highly innovative players stand the best chance of success.

Overall then, the conference revealed an industry short on ideas, low
in revenue, and in a gloomy frame of mind. The latter point was exemplified
in the morning session of the final day, aptly entitled “Moving Past the
Millennium.” Here, two upbeat presentations from U.K.-based journalists
rapidly descended into gloomy prognostications from industry representatives.
Asked to look forward to 2010, Springer-Verlag’s Arnoud de Kemp replied:
“I’m pessimistic. The information society is not creating the millions
of new jobs we were promised, but less.” Added Elspeth Hyams, of the Institute
of Information Scientists, “There will be huge changes in the way in which
companies do business, but most people won’t get the benefits of technology.”

Struggling with pre-millennial flu, Ciaran Morton, Dialog’s president
for Europe, Middle East, Africa, and Asia Pacific, even thought the unthinkable.
“The entire market could change dramatically,” he said, asking rhetorically,
“Will we even be charging for information in the future?” However, such
gloom is perhaps no bad thing. The industry’s salvation surely lies in
thinking the unthinkable. And to move on, it is necessary first to stare
into the abyss.

So will the industry make a successful transition to the new millennium?
I certainly hope so. To do so, however, it will need to learn a lot of
new tricks, and become far more innovative and entrepreneurial than it
is today.

Buffet predicts the industry will fragment. “The future lies in niche
markets,” he said. “Questel•Orbit’s focus is now firmly on intellectual
property.” If he is right, this will have implications for the organizers
of events like Online Information, too. After all, if the industry’s efforts
shift to the niche markets they serve, rather than the medium of delivery,
the logic of exhibiting at an online event will evaporate.

Such a trend can already be seen in the U.K. company information sector.
ICC, Perfect Information, and OneSource have all ceased exhibiting at the
conference in recent years. “There is increasingly less need to attend
events like Online,” says Alistair Pauline, ICC’s managing director. “We
know who our clients and prospects are in these markets, and can make much
more effective use of resources to ensure we target them correctly. Today,
therefore, we only exhibit at a number of credit-focused exhibitions.”

No surprise, perhaps, that exhibitor numbers were down this year, from
296 to 279. To quote Yeats, “Things fall apart; the centre cannot hold.”

Richard Poynder is a freelance journalist based in Oxfordshire, U.K.
His work appears in numerous publications as well as in the London Financial
Times and The Wall Street Journal Europe. His e-mail address
is rich_p@dial.pipex.com.